Didcot power station shuts after 42 years

A power station which has generated electricity for more than 40 years closed today.

Coal-fired Didcot A power station in Oxfordshire, run by energy giant RWE npower, was shut down under EU rules to reduce pollution – a move that was announced last September.

During its lifetime, the power station provided electricity to millions of homes and businesses across the UK.

Phil Noake, Didcot A power station manager, said: "This is a sad time for everyone at the power station, but I'm very proud of what we've achieved over the past 42 years.

"I would like to personally thank all those in the local community who have supported us over the years, and thank our staff for their continued dedication and wish them success for their future."

Didcot is one of the first in a series of plant closures expected in coming years as around one-fifth of Britain's old and polluting power capacity is shut by 2020.

Last week, utility Scottish Power shut down its 1,200MW Cockenzie coal plant near Edinburgh.

Didcot A, located in Oxfordshire, started operating in September 1970.

Under a European Union law limiting pollution from power plants, Didcot in 2008 was permitted a further 20,000 hours of operation and this has now expired.

An adjacent 16-year old gas-fired power plant will not be affected by the closure, RWE npower said.

The head of Britain's energy regulator has warned of a looming power supply crunch and higher energy bills before new replacement capacity is built.

British utility SSE also said it would shut a quarter of its polluting and unprofitable power capacity over the coming year, warning that the government is seriously underestimating a looming electricity shortage.

SSE also warned that a lack of clarity on proposed changes to the electricity market meant it would not decide to build any new power stations over the coming three years.

"The government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result," said Ian Marchant, chief executive of SSE.

SSE's review will lead to the closure of its power station at Slough, west of London, the mothballing of Keadby in eastern England and the shutdown of some units at three other sites – Ferrybridge in northern England, Uskmouth in Wales and Peterhead in Scotland.

Around one-fifth of the UK's power plants are set to close by 2020 as old, polluting plants shut and the supply gap is worsened by operators' decisions to mothball unprofitable gas plants that have been hit by high input prices.

The head of Britain's energy regulator warned last month that Britons faced rising energy prices in a supply roller-coaster, as spare capacity margins tighten to as low of 4 per cent, compared with around 14 per cent now.

SSE said the government needs to speed up its electricity market reforms and offer a so-called capacity mechanism, where power plants are rewarded for being on stand-by, from 2014 instead of the planned 2018 start date.

"We are not complacent about this, which is why we have an insurance policy – the capacity market," energy minister John Hayes said.

"We're considering how and when this can best be used to bring about any necessary increase in supply or reduction in demand."

Analysts said it was unlikely the country's lights would dim but a squeeze on capacity would increase price volatility.

"I don't think you'll see the lights go out, I think you'll see volatility in the prices, that's how it will manifest itself," said Iain Turner, analyst at Exane BNP Paribas.

Power traders said the plant closures had been largely expected and priced into forward power contracts, but agreed that tighter margins had added to price volatility, especially when there was high wind power production.